Published Friday, 02 June 2017

IEEP on CNBC Asia

China’s partnership with the EU on climate leadership, coupled with President Trump’s announcement to withdraw from the Paris Agreement marks a tectonic shift in global climate politics.

At the Copenhagen Summit in 2009, the European Union was pushed to the side by the alliance of the US and emerging countries. And prior to the conclusion of the Paris agreement, the US-China joint declaration on climate change cooperation was hailed as the key element paving the way for a new climate change agreement.

But now, with President Trump taking the US out of the agreement, the European Union and China have claimed co-leadership on climate change. The leaked joint declaration draft covers a number of elements including: a strong recommitment to the Paris agreement, willingness to work together to provide climate finance to developing countries and a number of areas for cooperation, for instance on carbon trading.

One reason for this tectonic shift is the stance of the Trump administration. But more importantly, China and the EU have a lot in common.

Both are on course to overshoot their 2020 Paris commitment and are therefore well placed to demonstrate leadership to other countries. They both see a substantial increase in renewables in their energy mix as a key element to their energy security strategy. They want to become leaders in low carbon technologies, which will be important for their future growth and competitiveness. And both have made substantial commitments to provide climate finance to developing countries. China made a 3.1 billion dollar pledge while the EU and its Member States provided 14.5 billion euros in 2014.

Despite US exit, Paris Accord will move forward

The Trump administration’s decision to withdraw from Paris should not come as a surprise – candidate Trump made clear his intentions - and nor is it a catastrophe. Irrespective of the US move, the Paris agreement will continue to stand. It entered into force in 2016, and 147 countries have already ratified it.

President Trump had made it abundantly clear that he didn’t believe in climate change and that he wanted to unravel the climate policies put into place by the Obama administration - both domestically and internationally. Market forces and technological breakthroughs will continue to fuel the world’s transition away from fossil fuels. Obviously, positive domestic action by the US government to reduce carbon emissions would help accelerate the transition, but there is nothing that President Trump can do to stop it.

This is not the first time that the US has failed to join or withdrawn from international agreements. The US did not ratify the Kyoto agreement - the predecessor to the Paris agreement. The US Senate failed to ratify relatively uncontroversial international agreements such as the UN Convention on Disability rights in 2012.

Although the Paris agreement architects bent over backwards to accommodate the US, no one was willing to bet on the ability of any US administration, even a Democratic one, to get the Senate to ratify the Paris agreement.

Unfortunately, the biggest collateral damage from the US decision is climate finance. The US had pledged 3 billion dollars and still, has 2 billion to deliver. Going back on its climate finance promises to the world’s poorest nations will be controversial, will reduce US influence, and will not help the US in its efforts to encourage financial commitments from partners in other areas, such as NATO. Filling the vacuum it leaves will be challenging.

Another key question is whether other skeptical major players, such as Russia and Turkey, who have not yet ratified, or Saudi Arabia will follow Trump’s footsteps. Being inside the Paris agreement at least gives you a chance to influence the process and protect national interests (such as energy exports) which are perceived as being threatened.

Could the US rejoin in the future?

We obviously hope to see a different direction from the next US administration and a different approach by the US Senate. However, parties to the agreement will probably want reassurance against future US flip-flopping; and would probably place the greatest emphasis on the need for the US to take ambitious, concrete domestic measures. The fact that many states and cities in the US have pledged to continue their commitments to reducing emissions helps lay the groundwork for that.

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